The plaintiff was the owner of a vehicle damaged as a result of the negligence of the defendant. The repairs took some time to complete. The dispute is about the quantum of the cost of hire of a replacement vehicle. The vehicle was a 2015 Alfa Romeo Giulietta "Quadrifoglio" four door hatch. The plaintiff's evidence was that the damaged vehicle had a manual transmission, and that she purchased it second hand in January 2020 for just under $20,000. At that time, it had an odometer reading of about 43,000 km. The plaintiff firstly hired an Audi A4 sedan from Inner West Car Rentals. She returned the Audi A4 and exchanged it for a BMW 318i as she was not comfortable driving it. These are not part of the claim.
On 12 November 2021, the plaintiff entered into a rental agreement with Right 2 Drive Pty Ltd (R2D) to supply her with a replacement motor vehicle, a Mercedes A180 Hatch (the Mercedes) for her unrestricted use while the Alfa was being repaired. The rental agreement provided for the Mercedes to be charged at a base rate of $230 per day, resulting in an inclusive daily rate of hire of $319 per day; the plaintiff used the Mercedes from 12 November 2021 to 18 March 2022 (a period of 126 days), the later date being when the Alfa was fully repaired and returned to the plaintiff. The cost of hiring the Mercedes for a period of 126 days was in the amount of $40,342.50 and the plaintiff seeks recovery of these mitigation expenses as special damages.
A tortious wrongdoer in a motor vehicle case such as this, is liable to pay the wronged party general damages for the inconvenience caused by the tort. However if the wronged party acts to seek to mitigate that damage, by for example hiring a replacement vehicle, the wrongdoer will be liable for special damages measured by the cost of expenses reasonably so incurred, unless, broadly, those steps taken in mitigation are shown by the wronged party to have been unreasonable (see generally Arsalan v Rixon [2021] HCA 40 ("Arsalan")). In such a case there would need to be a reduction so that no more than what was or ought have been reasonably incurred is awarded.
The plaintiff submitted that once standing to sue and inconvenience and or loss of amenity is established by the plaintiff, it is then for the defendant to prove to the requisite civil standard of proof that she acted unreasonably in taking the mitigation steps she did.
The defendant submitted that it discharged that burden.
It submitted that the conclusions to which the evidence leads are that:
1. had the plaintiff, prior to agreeing to incur hire charges for the Replacement Vehicle Supplied, had at her disposal such information concerning the availability and terms of hire of alternative substitute vehicles as reasonable inquiries would have disclosed to her, the reasonable course for her to have taken would have been to hire an alternative substitute vehicle at substantially lower cost than that of the Replacement Vehicle Supplied, specifically a Toyota Corolla Ascent Sports Auto hatch of the kind that was on offer at the Budget depot in Croydon; and
2. the plaintiff's omission to adopt that less costly course in order to mitigate her Actual Loss was, in the circumstances, unreasonable, and her damages are to be assessed accordingly.
On the defendant's primary submission, the special damages awarded to the plaintiff should be assessed at $14,500.11, calculated as follows:
1. a daily base rate of $99.61 per day which for 126 days = $12,550.86; plus
2. a GST-inclusive fee for reduction of insurance excess nil of $38.50 per day for the first 10 days of every thirty days of hire (being 46 days) = $1,771.00; plus
3. the GST-inclusive credit card surcharge of 1.29% = $184.75; plus
4. Right2Drive's GST-inclusive delivery charge of $93.50 which is not contested.
The defendant's alternate submission was that if the Court is not satisfied that the amount of the hire charges incurred by the plaintiff was unreasonable in the sense in which that expression is used in Arsalan v Rixon at [36], those charges are credit hire charges and the evidence shows that the plaintiff could have hired a vehicle of the very same make and model as the Replacement Vehicle Supplied on non-credit hire terms for less than the Invoiced Sum.
On that basis, on the defendant's alternative submission, the special damages awarded to the plaintiff should be assessed at $18,701.60.
In the further alternative, if the Court is not satisfied that any hire that the plaintiff would have negotiated would have been a discounted rate that applied to hire of minimum seven-day duration, the special damages awarded to the plaintiff should be assessed at $32,625.79.
[2]
Reasonableness of mitigation
Returning to the first, and decisive issue, reasonableness of mitigation, the defendant pointed out that in Arsalan the High Court re-affirmed, that "[w]here a plaintiff acts in an attempt to reduce a loss, the onus shifts to the defendant to show that the acts actually taken by the plaintiff were unreasonable acts of mitigation". Hence, if the "acts actually taken" consist in incurring hire costs, then, to the extent that those hire costs are in fact "incurred in an attempt to mitigate loss caused by wrongdoing" they "become, themselves, a head of damage", and the defendant bears the legal onus of "establish[ing] that the amount of the hire costs incurred was unreasonable" for one or more reasons.
It therefore accepted (full citations omitted) that where a defendant's case is - as it is in the present case - that the daily amount of hire costs incurred in an attempt to mitigate compensable loss is "unreasonable" by reason of "the replacement vehicle hired, in light of the range of vehicles that might fairly be regarded as equivalent to the damaged vehicle", the issue arising for determination is whether:
1. the daily hire costs incurred by the plaintiff exceed in amount the hire costs that the plaintiff would have incurred had s/he hired some alternative vehicle that was available for hire to him or her and that was "broadly equivalent" to his or her damaged vehicle (i.e. it fell within what the High Court has called "the range of vehicles that might fairly be regarded as equivalent to the damaged vehicle"); and
2. it was unreasonable in the plaintiff's circumstances to have incurred the cost of hiring the substitute vehicle that s/he in fact hired rather than hiring the available alternative vehicle.
The defendant went on to properly concede that it bears the legal onus of pleading and proving that a plaintiff has acted unreasonably, or has unreasonably omitted to take action, in order to mitigate compensable loss. The defendant also bears the legal onus of quantifying the consequences of the unreasonable acts and/or omissions alleged. Whether a plaintiff's particular action, or omission to take particular action, in an endeavour to mitigate avoidable loss is in particular circumstances unreasonable is always a question of pure fact. In Arsalan, the High Court noted prior United Kingdom authority in which the conduct of a particular plaintiff whose endeavours to mitigate special damage in the form of motor vehicle hire charges were found to have been inadequate and therefore unreasonable included "hir[ing] from a company that was not in the habit of hiring cars", "failure to make any real enquiry about price" and "failure to avail itself of a 20 per cent hire discount by paying cash".
Since the facts of potential cases are in principle infinitely variable, the grounds on which a plaintiff might potentially be found to have acted unreasonably, or to have unreasonably failed to act, in mitigation of loss are in principle correspondingly infinite; and a finding that particular conduct of a particular plaintiff in particular circumstances was reasonable or unreasonable cannot be elevated into a decisive legal requirement in other cases.
On the same principle, if the unreasonableness or otherwise of daily hire costs incurred by a particular plaintiff turns on the question whether two or more vehicles were "broadly equivalent" (i.e. whether each of them fell within a "range of vehicles that might fairly be regarded as equivalent" to each other) the question is one of pure fact, and a finding concerning it that is made in a particular case has no precedential significance.
The plaintiff submitted that one should approach the question of reasonableness as follows (full citations omitted):
"112. The observations of Handley JA in Karacominakis v Big Country are apt, namely the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what they did. Further Handley JA noted that 'as the defendant is the wrongdoer, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required.' This is particularly so when the plaintiff reasonably believed that as she was the not at fault party in the collision that she was entitled to a reasonably equivalent replacement vehicle at no costs to her.
113. Furthermore, the observations of Bell J in Fallon v Johnston referring to (Lord Justice Loreburn in Lodge Holes Colliery Company v Corporation of Wednesbury) at [21] are particularly relevant when Bell J stated: Now I think a Court of justice ought to be very slow in countenancing any attempt by a wrong doer to make captious objections to the methods by which those whom he has injured have sought to repair the injury. …Errors of judgment may be committed in this as in other affairs of life. It would be intolerable if persons so situated could be called to account by the wrong doer in a minute scrutiny of the expense, as though they were his agents, for any mistake or miscalculation, provided that they act honestly and reasonably. In judging whether they have acted reasonably, I think that a Court should be very indulgent and always bear in mind who was to blame.
114. In light of the evidence before the Court it is submitted that a finding that the plaintiff acted reasonably can be made in respect to her decision to hire a replacement vehicle from R2D while the Alfa was unable to be driven by her. The criticisms levelled against her by the defendant should be rejected."
I do bear in mind that the defendant is the wrongdoer, and there should be broadly an approach to quantification that is not too finely calibrated or overly alert to seek possible criticisms of what was done. Nevertheless, ultimately the question is one of fact - was what was done by way of mitigation reasonable in all the circumstances?
In this case the plaintiff made no effort to shop around or test the market. She did not seek a weekly or longer rate. She went to R2D and accepted their offer to hire a Mercedes at the daily rate offered, together with the excess reduction. She received a new or almost new car (2021) with a purchase value well in excess of the value of her 6-year-old vehicle (about $50,000 compared to about $15,000). It was an automatic (sports automatic dual clutch) whereas her car was a manual. It was a sedan whereas hers was a hatchback.
The conclusion is inescapable that she effectively didn't bother to research or ask about alternatives to save money because she expected all the expense to be thrown upon the defendant, or if not, then covered by R2D, so she had no exposure.
It is not a "captious" approach or an unreasonably high standard to impose on a plaintiff an obligation to take some care to seek a vehicle and or a price that at least considers the cost burden on whoever will be meeting it. Borrowing from another context, it is not unreasonable to require a person to treat others, or act, as you would like to be treated. The answer to whether a reasonable person in the plaintiff's shoes, assuming she did not have unlimited resources, would have incurred an ongoing liability of over $300 a day to replace her 2015 hatchback car, worth about $15,000, with a 2021 Mercedes sedan is obvious, if there were cheaper alternatives suitable for her needs.
In this case that last aspect was explored. On the day that the plaintiff agreed to incur a daily rate of hire of $319.44, a Toyota Corolla hatch or similar was advertised for hire at the Croydon depot of Budget at a GST-inclusive daily total charge of $99.61 plus an additional GST-inclusive fee for reduction of insurance excess to nil of $38.50 per day for the first 10 days of every thirty days of hire. Had the plaintiff hired a Toyota Corolla hatch or similar from Budget for 126 days, she would thus have incurred a total charge of $14,321.86. On that charge, there would also have been payable a credit card fee of 1.29% inclusive of GST or $184.75. Hence the total cost to the plaintiff of hiring a Toyota Corolla or similar with a nil excess from Budget in Croydon would have been $14,506.61 or $115.13 per day.
A vehicle offered for hire in Croydon was offered in a geographical market that was conveniently available to the plaintiff. The plaintiff confirmed in evidence that she lives in Strathfield and that Croydon is a suburb located nearby.
The defendant also pointed out that the evidence from the plaintiff in cross-examination included the following:
1. An important element of the amenity of the Damaged Vehicle to the plaintiff was that it was hatchback.
2. The power of the engine was also an important element of the amenity of the Damaged Vehicle to the plaintiff.
3. The small size of the Damaged Vehicle was important to its amenity to the plaintiff, and she had for that reason, in the period before her dealings with Right2Drive, asked Jubilee Smash Repairs to substitute a smaller vehicle for the Audi A4 that was initially provided to her.
4. The plaintiff agreed that the features she was looking for in a temporary substitute were a vehicle that was not too big, preferably a hatchback and with relatively high engine power.
I accept the defendant's submission that when determining whether, in this case, a particular alternative replacement vehicle was "broadly equivalent" to the plaintiff's Damaged Vehicle in the sense in which that expression is used by the High Court in Arsalan, the Court's "proper focus" is upon those of the features and "various functions" of the Damaged Vehicle that the plaintiff in her evidence identified as being of amenity to her.
A late model Toyota Corolla sports hatch was within "the range of vehicles that might fairly be regarded as equivalent to" the Damaged Vehicle.
The defendant's submissions highlighted the relative features of the 3 cars at Submissions paragraph 53, which are marked with an asterisk in the following table:
2015 Alfa Romeo Giulietta Quadrifoglio Verde 2021 Mercedes Benz A-Class A180 2021 Toyota Corolla Ascent Sport Auto
Body Hatch Sedan Hatch*
Doors 5 4 5*
Seating Capacity 5 5 5
Transmission Floor Steering wheel and column Floor*
Transmission Type Manual100 Sports Automatic Dual Clutch Automatic 10 speed constantly variable transmission
No of Gears 6 7* 10
Cylinders 4 4 4
Engine Capacity 1.7L 1.3L 2.0L*
Power 173.0 kW 100.0 kW 125.0 kW*
[3]
In Reply the plaintiff submitted inter alia that the defendant's submission should be rejected for the following reasons:
1. the issue of "prestige" (and its diminution over time) appears nowhere in paragraphs 5 or 6 the defence as an issue for determination by the Court;
2. "prestige" and its alleged diminution over time was not the subject of any expert evidence from the defendant;
3. the "price" of a replacement hire vehicle was not a specific factor said to be relevant by any of the three Court of Appeal judges in their respective decisions in Lee v Strelnicks [2020] NSWCA 115;
4. "price" was not a specific factor said to be relevant by any of the judges of the High Court in Arsalan;
5. there are no Australian case authorities cited by the defendant to support the submissions made.
It also pointed out that the offering was a Corolla "or equivalent", and that it may not have been for unlimited mileage.
Reasonableness is a question of fact. The pleadings adequately cover the disputed matters. Expert evidence is not required to opine on questions of reasonableness of conduct. It is notorious and obvious that there often is a correlation between the price of an asset and its quality or perceived quality, and that a new car (or cars with lower mileage) often will have superior features to older cars due, for example to advances in technology, as well as having less wear and tear.
Arsalan directs attention to the range of vehicles that might fairly be regarded as equivalent to the damaged vehicle. Given the age and other characteristics of the vehicle, the Toyota Corolla, while not as "prestigious" a brand, is fairly regarded as equivalent to the Alfa. The Mercedes is less equivalent based on the evidence above, in particular, its body type, value, transmission, engine capacity and power. There is no suggestion 200km a day would have been a material limitation to the plaintiff, nor that any "equivalent" would not have been precisely that, i.e., as suitable for her as the Corolla.
On the evidence, the Corolla was more closely equivalent to the Damaged Vehicle than was the Replacement Vehicle Supplied by Right2Drive.
A difference was that it was not European and not as "luxury" a brand. However, in the absence of any evidence that the "prestige" aspect of the Mercedes was of significance to the plaintiff, and bearing in mind the 2021 Corolla was new and worth vastly more than her 2015 Alfa, that does not carry crucial significance.
I am conscious of the force of what was said by Handley JA In In Stocovaz v Fung [2007] NSWCA 199 at [37]:
"… there may not be a single fair and reasonable cost for repairing a damaged motor vehicle, especially a Mercedes costing $95,563 new. There is likely to be a range of costs all of which are fair and reasonable. In such a case acceptable evidence that a lower cost would be fair and reasonable cannot of itself establish that a higher cost was outside the range and not fair and reasonable. The true question would be whether the cost incurred was outside the range. In my judgment this is only another way of asking whether the cost incurred was extravagant or unreasonable."
In my view the cost of the Mercedes was extravagant and unreasonable and outside the range. I reach that conclusion on the facts of this case, noting it was three times the cost of the Corolla. In the circumstances of the delay that occurred, which was at least reasonably foreseeable, that cost multiplied out to more than the entire value of the car being repaired. Renting it was disproportionate.
It follows that the damage suffered by the plaintiff should be measured by the cost of the Corolla, including excess reduction to zero, being $14,506.61.
There is no need to decide the question left open by the High Court about whether Australian law ought follow Dimond v Lovell [2002] 1 AC 384, in which a majority of the House of Lords was of the view that credit hire charges incurred by a plaintiff were not recoverable in their entirety when the evidence showed that a replacement vehicle equivalent to the one hired on credit hire terms could have been conveniently hired by the same plaintiff on non-credit hire terms at lower cost.
That would have involved the legal question, but also a factual question in assessing the comparability of the offerings in the market to see if the above test was met.
There will be a verdict accordingly.
[4]
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Decision last updated: 18 December 2023